38302393-Factors-Influencing-Mobile-Handsets-Purchase-Decision-Among-Youth

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FACTORS INFLUENCING THE DECISION OF MOBILE HANDSETS

PURCHASING AMONG YOUTHS: A CASE STUDY OF DLHI AND NCR

REGION

Dr. Manish Agarwal

ProfessorKIET School of Management

Email:[email protected])

ABSTRACT

The cell phone market is experiencing tough competition amongst all the cell phone

sellers, each providing cheaper and attractive handsets. A variety of handsets have been

launched to attract the customers. In the backdrop of this scenario, this study is

conducted to understand how customers place these companies in their mind. This study

tries to judge the perception of respondents by taking into account top end features, basic

features, brand image, economy, additional features, and versatility physic

characteristics provided by handset sellers with the help of factor analysis. The study

suggests that the handset sellers should be considering the above mentioned factors to

equate the opportunity.

Keynotes: Brand image, Economy, factor analysis, Mobile handset, Top end features,Telecom Industry.

I. INTRODUCTION

The telecom network in India is the fifth largest network in the world meeting up with

global standards. Presently, the Indian telecom industry is currently slated to an estimated

contribution of nearly 1% to Indias GDP. The Indian Telecommunications network with

280 million connections is the fifth largest in the world and the second largest among the

emerging economies of Asia.

Today, it is the fastest growing market in the world and represents unique

opportunities for U.S. companies in the stagnant global scenario. The total subscriber

base, which has grown by 40% in 2005, is reached to 280 million in 2008. The

attractiveness of the Indian market brought in some of the largest global players and

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major Industrial houses to invest in telecom. Mobile phone usage has permeated across

various economic classes as well as professional categories.

The Market Opportunities

India is the fastest growing telecom network in the world today and second largest in

Asia. Year 2006-07 witnessed 66 per cent growth in networks. Mobile handset sales were

nearly 100 million a year and PCs six million plus.

In the next three years, the plans are:

500 million telephone connections.

Of these at least 150 million will be in rural areas where farmer-entrepreneurs are

changing the countryside.

40 million high speed Internet subscribers.

20 million broadband subscribers with 2MBPS bandwidth.

100,000 common service centers in villages.

Wide Area data networks in 23 states.

US $ 5.8 billion e-Governance programme.

Millions of citizenship cards to be issued with biometric identification.

(Source: http://www.convergenceindia.org/ci%20pdf/Telecom.pdf)

Table 1: Telecom Statistics: (till January 2008)

Total telephone subscriber base: 281.62 millionNew Subscriber Additions in January: 8.74 millionOver all Tele-density: 24.63 %Fixed-line user base: 39.22 million (down from Dec figure of 39.25)Wireless user base (GSM, CDMA and WLL (F) ): 242.40 millionTotal broadband subscriber base: 3.24 million

Source: http://www.telecomindiaonline.com/indian_telecom_stats.html

The paper is organized as follows. In Section 2, literature pertaining to the

perceptions of users towards the mobile service and handset sellers is reviewed. Section

3 and 4 provides the need of the study and objectives of the study respectively, while

Section 5 delineates methodology of the study. Section 6 underscores the analysis of data

and interpretation of the results. Finally, Section 7 concludes the

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II. REVIEW OF LITERATURE

Pakola et al. (2003) surveyed 397 consumer purchasing motive s on one hand factors

affecting operators choice on the other. The results indicated that while price and

properties were the most influential factors affecting the purchase of a new mobile phone,

where as audibility, price and friends operators were regarded as the most important in

choice of mobile service operator.

Gupta (2007) concluded that Indian mobile user is willing to spend Rs.6,900 on

an average for the next handset. The average price paid for the current handset by and

Indian mobile user is Rs.3,700. The incremental spend for the next hand has grown to

Rs.3,200 indicating that the experienced users are willing to spend higher amount for

purchase of their next handset.

Liu (2002) examined factors affecting the brand decision in the mobile phone

industry in Asia. It is concluded that the choice of mobile phone is characterized by two

distinct attributes of brands: attitude towards the mobile phone brand on one hand and

attitude towards the mobile phone network on other. While choice and regularity of

service were found to be the dominant choice between network providers, choices

between mobile phone brands were affected by features.

Riquelme (2001) concluded an experiment to identify the amount of self-

knowledge that the consumers have when choosing a mobile phone brand. The study was

built on six parameters telephone features, connection fee, access cost, mobile-to-

mobile phone rates, call rates and free calls which are related to mobile phone

purchasing. The research shows that consumers with prior experience about the product

can predict their choices relatively well but tend to overestimate the importance of

features and overestimates the connection and monthly fees.

Karountzos, et al. (2003) surveyed 61 participants out of which 92% owned cell

phones, to identify the decision making process of the consumers while purchasing a cell

phone. Out of the 56 participants who owned cell phones, about 60% responded that they

needed it as opposed to because they wanted it. Based on their survey results the

physical appearance of phones seemed to be of great importance to the female target

market. Males on the either hand simply care about the actual function of the phone. The

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survey indicated that specifically color and weight is much more important to females

than to males.

Karjaluoto, et al. (2005) surveyed 66 participants in Finland about their buying

behavior. Close to half of the respondents reported acquiring a new mobile phone every

year and sometimes the changing cycle is even faster. The most explicit reason for

changing was that the old one was broken or did not work properly. This meant for the

participants that the mobile phone did not work, the calls were interrupted, for example

due to weak audibility, battery was weak, the screen was out of order or keypad was so

consumed that the numbers were invisible. While mobile phones were also acquired due

to new features including color display and polyphonic ring tones, some respondents

bought new phones in order to get an innovator and/or opinion leader

Fundamentally, respondents agreed that price, brand, and size of the phone were the main

factors affecting their choice of the new model.

III.NEED OF THE STUDY

The review of the literature reveals that mobile purchase is a high involvement decision

which comprises of both external and internal factors. Therefore it is necessary for the

marketers to keep in mind the various factors which undergoes while the purchase of a

mobile phone so that they can place the phone accordingly , for the right segment , in the

right place with right price and finally with the right branding.

IV.OBJECTIVE OF THE STUDY

This study is being carried out to identify the factors that influence on the purchasing

decision of the mobile phone among the youth in an age group of 22 to 30 yrs in NCR

region. A statistical approach, factor analysis has been used for the study.

V. METHODOLOGY OF THE STUDY

The study is based on the primary data collected from the students of various disciplines

of Ghaziabad district with the help of well crafted, pre tested and

questionnaire. The sample of the study consisted of 150 students who have mobile phone

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from different colleges of Ghaziabad. The demographics of the respondents were as

follows:

Table 2: Demographic Features of Respondents

Respondents Sample Size

PGDBM 50B. Tech. 25

B. Sc. 25

BCA 25

MBBS 25

Total 150

The respondents being the adopters of mobile phone were selected by non probabilistic

and convenience sampling technique (who ever seen using/have possession of mobile

phone).

The questions inquiring the choice of a mobile phone user and the operator were

implemented with 21 statements, respondents had to rate it according to the level of

importance on five-point Likert Scales. This is an exploratory research which will help us

in determining the purchasing behavior of youth for mobile phones. SPSS has been used

for the analysis of data.

VI.DATA ANALYSIS

The Data collected through the questionnaires was coded using SPSS. Factor analysis is

used to identify the factors affecting the choice of mobile handset.

Factor Analysis

The explanatory factor analysis is used in order to identify the factor affecting the choice

of mobile hand sets with special reference to youths from 150 respondents in NCR

region. To test the suitability of the data for factor analysis, the following steps have been

taken:

The correlations matrices are computed and examined .it reveals that there are

enough correlations to go ahead with factor analysis.

Anti-image correlations were computed. These showed that partial correlations

were low, indicating that true factors existed in the data.

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Kaiser-Meyer-Olkin measure of sampling adequacy (MSA) for individua

variables are studied from the diagonal of partial correlation matrix .it is found to

be sufficiently high for all variables. The measure can be interpreted with the

following guidelines: 0.90 or above, marvelous; 0.80 or above, meritorious; 0.70

or above, middling; 0.60 or above, mediocre; 0.50 or above miserable, & below

0.50, unacceptable.

To test the sampling adequacy, Kaiser-Meyer-Olkin measure of sampl

adequacy is computed, which is found to be 0.668. It is indicated that the sample

is good enough for sampling

The overall significance of correlation matrix is tested with Bartlett test of

sphericity for choice of mobile phone (approx. chi square = 1861.92 significant at

0.000) as well as support for the validity of the factor analysis of the data set.

Table 3: KMO and Bartlett's Test

Hence all these standards indicate that the data is suitable for factor analysis. For

extracting factors we have employed principal components analysis and latent root

criterion. Rotation methods, orthogonal rotation with Varimax were also applied. As per

the latent root criterion, only the factors having latent roots or Eigen values greater than 1

are considered significant; and all the factors with latent roots less than 1 are considered

insignificant & disregarded.

Factor Influencing Mobile Handset Purchase

There are only seven factors each having eigen values exceeding one for mobile handset

purchase. The index for the present solution accounts for 70.059% of the total variations

for the purchase of the handsets. It is pretty good extraction because we are able to

Kaiser-Meyer-Olkin Measure of

Sampling Adequacy..668

Bartlett's Test of

Sphericity

Approx. Chi-

Square1861.924

df 210

Sig. .000

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economize the number of choice factors. (i.e. from 21 statements to 7 underlying factor).

The percentage of variation explained by factor one is 15.198% & that of 2, 3, 4, 5, 6 and

7 are 14.718%, 11.118% , 7.753%, 7.397%, 6.984% and 6.890% respectively.

Table 4: Total Variance Explained

Com

pone

nt

Initial Eigen valuesExtraction Sums of Squared

Loadings

Rotation Sums of Squared

Loadings

Total% of

Variance

Cumulativ

e %Total

% of

Varian

ce

Cumulativ

e %Total

% of

Variance

Cumulativ

e %

1 4.851 23.101 23.101 4.851 23.101 23.101 3.192 15.198 15.198

2 2.456 11.698 34.799 2.456 11.698 34.799 3.091 14.718 29.916

3 2.053 9.778 44.577 2.053 9.778 44.577 2.335 11.118 41.034

4 1.650 7.859 52.435 1.650 7.859 52.435 1.628 7.753 48.7885 1.394 6.636 59.072 1.394 6.636 59.072 1.553 7.397 56.185

6 1.240 5.906 64.978 1.240 5.906 64.978 1.467 6.984 63.169

7 1.067 5.081 70.059 1.067 5.081 70.059 1.447 6.890 70.059

8 .970 4.618 74.677

9 .840 3.998 78.676

10 .739 3.521 82.197

11 .606 2.887 85.084

12 .562 2.677 87.760

13 .457 2.174 89.934

14 .392 1.866 91.800

15 .342 1.630 93.430

16 .322 1.534 94.964

17 .270 1.288 96.251

18 .250 1.193 97.444

19 .203 .966 98.410

20 .182 .867 99.277

21 .152 .723 100.000

Note:Extraction Method:Principal Component Analysis

Table 5: Communalities

Initial Extraction

Size 1.000 .720

Brand 1.000 .531

Popularity 1.000 .769

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Design/Style 1.000 .677

Color 1.000 .814

Price 1.000 .694

Weight 1.000 .840

Features 1.000 .578

Quality 1.000 .625Service 1.000 .814

Accessories 1.000 .744

Plan 1.000 .657

Reception 1.000 .670

Bluetooth 1.000 .688

Calendar 1.000 .613

Camera 1.000 .747

Media Player 1.000 .691

Video Capture 1.000 .800

Speaker Phone 1.000 .756

FM 1.000 .752Touch Screen 1.000 .531

Large communalities in Table 5 indicate that a large number of variance has been

accounted by the factor solution. They are bigger than 0.5 for all the questions. This is the

indicator of suitability of the questions.

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Table 6: Rotated Component Matrix (a)

Component

1 2 3 4 5 6 7

Size .138 .159 .076 -.090 .023 .015 -.853Brand .131 .054 .598 .303 .168 -.081 .164

Popularity .148 .004 .616 -.165 -.311 .487 .079Design/Style .211 .136 .685 -.309 .217 .045 .029

Color .130 .030 -.029 .040 .037 .890 .018Price .050 .050 .047 .809 .061 .023 .169

Weight -.011 .081 .113 .240 -.024 .092 .868Features .205 .281 .327 -.188 .332 -.114 .438Quality .009 .647 .345 .006 .051 .045 .288Service .060 .872 .038 -.087 -.129 .096 .123

Accessories .255 .466 -.195 -.487 .078 .421 .051

Plan .100 .737 -.110 .285 -.036 -.050 -.076Reception .406 .684 .120 -.132 .066 .026 .008Bluetooth .703 .147 -.076 -.123 -.136 .031 .363Calendar -.052 .373 .219 -.122 .467 .361 .247Camera .812 .232 .069 .042 .110 .012 -.124

Media Player .719 .219 -.069 .060 .198 .254 .120Video Capture .824 .152 .184 .082 -.191 -.039 -.141Speaker Phone -.129 .019 -.250 .298 .753 -.075 .019

FM .076 .397 .341 .423 .452 .040 -.296Touch Screen .641 -.239 .138 -.058 -.172 .105 .032

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Table 7: Factors

Table 7 has been formulated from SPSS data output. The variables are extracted

from the graph with factor loading greater than 0.4 .The youth considered top end

Factor Numbers Name of Dimension Factors Factor Loading

F1 Top End Features

BluetoothCamera

Media PlayerVideo CaptureTouch Screen

0.7030.8120.7190.8240.641

F2 Basic Features

QualityService

PlanReception

0.6470.8720.7370.684

F3 Brand ImageBrand

PopularityDesign/Style

0.5980.6160.685

F4 EconomyPrice

Accessories0.809-0.487

F5 Additional Features

FM

SpeakerCalendar

0.4520.753

0.467

F6 Versatility Color 0.890

F7Physical

Characteristics

WeightSize

Features

0.868-0.8530.

0.438

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features as the first dominating factor. In this factor the role of manufacturer played a

significant role in influencing choice of mobile phone. The youth preferred the mobile

phones that were having features like Bluetooth, camera, Media player video capturing

and Touch screen. The second significant factor was the basic features provided by the

manufacturers. It indicated the youth judged the credibility of handsets on the basis of

basic features provided by the Mobile manufacturers. Brand Image is the third factor. It

indicated that the awareness of youth to cope up with new technologies and features. The

brand image of the company helped them in choosing a particular mobile phone.

The fourth factor is the Economy indicated that respondents want good value for

the money they invested in the purchase of mobile handsets. The fifth factor is the

additional features like speaker, FM and Calendar, which also provide value for money is

also been considered as important one by the respondents. Versatility in the form of color

also gets due weight age by todays youth. The last factor, physical characteristics of the

mobile handsets plays a vital role in influencing the purchase of mobile handsets.

VII. CONCLUSION

The conclusion of the study shows that there are seven major factors which influence the

mobile purchase decision of youth. These factors are Top end Features, Basic Features,

Brand Image, Economy, Additional Features, Versatility and Physical Characteristics.

These seven factors include all the factors that were aimed to study the mobile purchase

decision. The present study is based on sample of 150 youths from the total population in

the NCR region and has shown the relationship between the factors and the buying

decision of the customer through factor analysis. The study suggests that the marketer

should be considering the above mentioned factors to equate the opportunity. The study

may show some deviation due to complexity in consumer taste & preferences in different

region.

VIII. REFERENCES

Gupta, S. (2007), IDC India Mobile Handset Usage and Satisfaction S

http://www.idcindia.com/press/oct16.html

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Hair, J. F., Ralph, E. A., Ronald, L. T. and William, C. B. (1995), Multivariate Data

Analysis, 4th Edition, Prentice Hall, New Jersey.

Karjaluoto, H., Karvonen, J., Kesti, M., Koivumki, T., Manninen, M., Ristola, A. and

Salo, J. (2005), Factors Affecting Consumer Choice of Mobile Phones: Two

Studies from Finland, Journal of Euro marketing, Vol. 14, Vol. 3, pp. 59-82.

Karountzos, G., Lynn, K., Lescano, J., Rodriguez, A., Torres, M. and Vinanzaca, M.

(2003), The Decision Making Process among Consumers when Purchasing a Cell

Phone, http://mariajtorres.com/documents/RevisedConsumerProject.pdf

Liu, C. M. (2002), The Effects of Promotional Activities on Brand Decision in the

Cellular, Journal of Product and Brand Management, Vol. 11, No. 1, pp. 42-51.

Malhotra, N. K. (2005), Marketing Research: An Applied Orientation, 4th Edition Pearson

Education, Indian Branch, New Delhi.

Natrajan, R. C. (2006), Perception of Mobile Telephony among Youth, The ICFAI

Journal of Management Research, pp. 7-17.

Pakola, J. and Sevento, R. (2003), An Investigation of Consumer Behavior in Mobile

Phone Markets in Finland, Proceedings of 2ndEMAC Conference Track: New

Technologies and E-marketing, Accessed from www.oasis.oulu.fi

Riqulme, H. (2001), Do Consumers Know What They Want?, Journal of Consumer

Marketing, Vol. 18, No. 5, pp. 437-448.

Websites:

http://www.telecomindiaonline.com/indian_telecom_stats.html

http://www.convergenceindia.org/ci%20pdf/Telecom.pdf

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38302393-Factors-Influencing-Mobile-Handsets-Purchase-Decision-Among-Youth